TMI Blog2022 (5) TMI 669X X X X Extracts X X X X X X X X Extracts X X X X ..... the Learned Principal Commissioner of Income Tax, Central - 4, Mumbai [hereinafter in short Ld. Pr.CIT ] dated 27.03.20219 for the A.Ys. 2012-13 and 2014-15. 2. Since the issues raised in both these appeals are identical, therefore, for the sake of convenience, these appeals are clubbed, heard and disposed off by this consolidated order. We are taking Appeal in ITA.No. 3522/MUM/2019 for Assessment Year 2012-13 as a lead case. 3. Brief facts of the case are, assessee filed its return of income u/s.139(1) of the Income Tax Act (hereinafter, the Act ) on 30.09.2012 wherein deemed total income u/s 115JB was at ₹.82,43,377/-. A search and seizure action u/s.132 of the Act was carried out on 18.02.2014 in the case of Raj K Shah Group at its office and residence of the key person Raj K Shah. The assessee is a Private Limited Company in which Raj K Shah is a Director. The assessment in the case of the assessee company was completed u/s 143(3) r.w.s. 153C of the Act, determining total income at ₹.2,89,66,121/- on 30.12.2016. In response to notice u/s.153C of the Act, assessee filed return of income manually declaring total income at ₹.12,48,04,590/- on 11.01. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he circumstance of the case, the learned Pr. CIT erred in setting aside the assessment order dated 31st December 2016 passed by the Dy. Commissioner of Income Tax, Central Circle - 8(1), Mumbai and directing the Assessing Officer to pass a fresh Assessment Order. 3. On the facts and in the circumstances of the case, the learned Pr. CIT erred in holding the assessment order passed under section 143(3) r.w.s. 153C of the Act as erroneous or prejudicial to the interest of revenue wherein additional income disclosed by the Appellant was not considered. The Pr. CIT ought to have appreciate that any further addition in this regards will amount to double taxation of single receipts and against the provision of Income Tax Act. 4. The appellant craves leave to add, alter, amend and/or withdraw any ground or grounds of appeal either before or during the course of hearing of the appeal. 7. Ld. AR submitted his written submissions which is reproduced below: - Facts of the case: 2. The following are the facts of the case relevant to dwell upon the issue as to whether the Pr. CIT was justified in passing the revision order u/s.263 of the Act:- (a) A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f RahulRaj Estates Private Limited from Rose Gems Private Limited received in A.Y. 2012-13 3,00,00,000 Accommodation entries taken in books of Raj K Shah from Minaxi Diamonds in AY 2013-14 1,00,00,000 Excess jewellery found during the course of search 11,42,104 27,99,25,495 Offer in statement Rounded off to 28,00,00,000 (e) Based upon the statement recorded and offer made as above as per application of funds, the total unaccounted income of Rs.28 crs was offered in the hands of the Appellant herein and bifurcated in 3 Asst. Years 2012-13, 2013-14 and 2014-15 on the contention that the Appellant herein follows project completion method of accounting and the project was completed and occupancy certificate received in July 2011 and thereafter agreements for sales were executed and profits offered in the regular books of account. Based upon the same and following the method of accounting regularly employed i.e. project completion method of accounting, the total amo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der: Sr. No. Particulars Rahulraj Estate Pvt. Ltd. (RahulRaj Mall) RRahulRaj Realtors Pvt. Ltd. (RRahulRaj Textile City) Total 1 Receipt 46,94,71,274 60,08,50,444 107,03,21,718 2 Scrap Sale 22,72,100 22,72,100 45,44,200 Total 47,17,43,374 60,31,22,544 107,48,65,918 The AO has thus made the entire addition of On-money receipts as worked out by him in the order passed for Assessment year 2011-12. [Paper book pages 65 to 84- copy of asst. order for AY 2011-12] 7. As stated above, the Appellant herein had offered total unaccounted income amounting to Rs.28 crores towards on-money receipts (suppression of sales) in 3 assessment years and this amount of Rs.28 crores was based upon the Application of funds as explained above. 8. Howe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s 132(4) of Shri Raj KShah on 18.02.2014. 7.14 The assesse has contended that the offer of income in the case of the assesse was made (as discussed in para 7.11) by apportioning the particulars as laid down in the table at para 7.12 as per the Sales Offered and percentage of sales per year to the total, since the assesse follows Project Completion method. However, since the amounts in question pertain to unaccounted receipts , the theory of applicability of project completion method is rejected as these receipts would have never been accounted as per project completion method had the search and seizure action not happened. Since the 15 red colored notebooks pertain to a specific period i.e F. Y 2010-11, the unaccounted receipts pertaining to RRM as on the last day of FY 2010-11 have been added to the total income of the assesse for the A. Y 2011-12. Exception to the addition is only made in the case of bogus unsecured loan of Rs.3 crores availed from Rose Gems Pvt. Ltd (M/s. Rose Gems Pvt. Ltd. is one of the bogus concern managed and controlled by Bhanwarall Jain Group) during F.Y 2011-12 relevant to A.Y 2012-13 in the books of M/s. RahulRaj Estates Pvt Ltd which has be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11,42,104 Total 50,17,43,374 60,31,22,544 24,99,25,495 135,47,91,413 15. From the above table, it can be seen that the AO has made addition in respect of both the source of funds as well as the application of funds. The AO has made the addition of gross on- money receipts of Rs. 107.03 crores; scrap sales of Rs.45.44 lakhs; accommodation entries taken of Rs.27.87 crores and excess jewellery found of Rs.11.42 lakhs. 16. In other words, the unaccounted income offered of Rs.28 crores is also added by the Assessing Officer apart from making addition of gross on-money receipts and scrap sales of Rs. 107.48 crores as seen from the above table. Proceedings u/s.263: 17. The Pr. CIT issued notice u/s.263 of the Act dated 05.02.2019 for both the Asst. Years 2012-13 and 2014-15 (identically worded except for figures) on the ground that the AO has invalidated the return of income filed in response to notice u/s.153C of the Act and not added the additional income declared in the return of income filed u/s.15 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ifferent from the proceedings u/s 263....... (c) The AO has not considered the figures reported in the manual revised return of income filed u/s 139(5) of the Act while assessing the total income of the assessee and hence, the case of the assessee clearly falls under clause (a) of Explanation 2 to the section 263 wherein; (a) The order is passed without making inquiries or verification which should have been made, or . is deemed to be erroneous in so far as it is prejudicial to the interest of revenue. 20. Thus, in para 5.2, the Pr. CIT applied clause (a) of Explanation 2 to sec.263 of the Act, and finally in para 7 of the order, gave finding that the assessment order was erroneous and prejudicial to the interests of Revenue. Accordingly, the Pr. CIT set aside the assessment order and directed the Assessing Officer to reframe the assessment de novo afresh. Proposition and Contentions: 21. From the facts stated above as also various tabulations made above, it is undisputed fact that- a) the entire on-money receipts is taxed by the AO in AY 2011-12 and thus, no addition is made once again to the total income assessed for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12 and also rejected the contention of the Appellant to tax the same on the basis of project completion method of accounting and in subsequent years as offered by the Appellant; (ii) The AO has added gross on-money receipts of more than Rs.47 crores including scrap sales in hands of the Appellant herein as against the offer of Appellant of Rs.28 crores; (iii) The AO has duly considered all the figures and amounts in the assessment order and tabulated the same from para 7.9 onwards and that the accommodation entries are not allowed for set off against source of income and added separately in the respective Assesse case to which it pertains - as shown in the chart tabulated in para 14 hereinabove (iv) the Appellant has filed appeals to CIT(A) for all the years and thus, the issue of taxation of on-money, its quantification and year of taxability as also the claim of set off of Application of funds from source of funds are open before the CIT(A) and thus, having already filed appeal to the CIT(A) for all these years on 27.01.2017 [refer pages 85 to 87 of paper book filed], the notice issued u/s.263 of the Act on 05.02.2019 is invalid and not tenable; 23. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bsequent years whereas if addition were made again on basis of disclosure of Appellant in AY 2012-13 and 2014-15, then it would show that the AO has accepted the contention of the Appellant to tax the on-money receipts in the years in which the project is completed and on the basis of apportionment as done by the Appellant. 29. Hence the assessment order passed is NOT erroneous in so far as prejudicial to the interest of revenue and accordingly order passed under section 263 of the Act deserves to be quashed. In this regards, the Appellant relies upon the following decisions for the proposition that the AO having taken one of the possible views after considering the entire facts of the case and due application of find, the same cannot be replaced only because the CIT has different opinion in the matter- a) CIT vs. Kwality Steel Suppliers Complex 395 ITR I (SC) b) CIT v. Max India Ltd. 295 ITR 282 (SC) c) Malabar Industrial Co. Ltd. v. CIT [2000] 243 ITR 83 (SC) d) CIT vs. Greenworld Corporation, 314 ITR 81 (SC) 8. On the other hand, Ld.DR relied on the orders passed by the Ld.Pr.CIT. 9. Considered the rival submissions and material plac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered ₹.12,58,38,469/- based on the Project Completion Method. However, he himself rejected the project completion method on unaccounted receipts. He observed that theory of applicability of project completion method is rejected as these receipts would have never been accounted as per project completion method had the search and seizure action not happened. Further, Assessing Officer observed that since 15 red colored notebooks pertain to a specific period for the Financial Year 2010-11. The unaccounted receipts pertain to RRM on the last date of Financial Year 2010-11 have been added to the total income of the assessee for the A.Y.2011-12. After recording that and rejecting the manual return filed by the assessee he proceeded to complete the assessment based on the original return of income filed by the assessee. 11. Ld. AR submitted that Assessing Officer verified all the relevant seized documents and submissions of the assessee, he submitted that Assessing Officer has enquired and analysed all the receipts as per 15 red colored notebooks. He further submitted that the Assessing Officer after due application of mind arrived at a conclusion for invaliding the return of i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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